Optimistic forecast, page-33

@ pete
I did a thorough analysis on the matter as follows:
In August 2020 share price was AUD 5,80 and gop AUD 2.750
gop now is AUD 2.400 (down by 15%)
Excluding hedge book-effects that has a pull on turnover and EBT of 360k oz x AUD 350 = AUD 126 million
As around 100k oz are sold into hedge book the actual effect should be lower at arount 260koz x AUD 350 = AUD 91 million
That accounts for around 1/3 of pre-tax profits (which were AUD 285 million in FY 2019/2020) and consequently on EPS.

AISC can be expected to be up by some AUD 100 (above prior year and guidance , which calculates to 360k oz x AUD 100 = AUD 36 million (another 12% on pre-tax profit and consequently EPS).

So that should account for around 45% of the downfall.

All in Tropicana acquisition will cost almost AUD 1.000 million. At the time of acuisition with a gold price of AUD 2.300 pre-tax EBT calculates to around 132 million per year (as there are some special production issues maybe less in the first year). Current valuation schemes on Regis have that figure multiplied by around 7 to get to the fair value of the expected income stream. So actually the Tropicana asset was not much more expensive than that calculation would indicate. In April Regis raised some AUD 660 million additional capital for the transaction. At that time with stable/rising gop RRL-share price went down from AUD 3,00 to AUD 2,60. Market CAP (inluding new shares) went up from around 1.5 billion to 1.95 billion, so on the 660 million over 200million (10% of total market CAP) was lost. I concluded for myself that market participants priced in a 250 million (around 25% of acquisition value) downcast on the Tropicana-deal (IMO not justified but what do I know...). So there is another 10% reason for the decline.

So at most I get to around 55% share price decline maybe accounted for. But coming from AUD 5,80 that 55%-minus would lead to a share price of around AUD 2,61.

However I do not believe the 250 million downside on Tropicana is justified, especially when taking into account that gop was 2.300 AUD at the time of acquisition and is now at AUD 2.400 (upping the expected EBT and NPV of the asset by almost 10%). So there is another upside potential, IMO at least 10%.

Additional upside potential comes from a low valuation to begin with. The AUD 5,80-valuation from August 2020 was already low, as the actual valuation is when compared to EPS to be expected for FY 2021/2022.
Additional potential comes from new projects and gop-development.